Wednesday, June 13, 2007

When pursuing your civil judgment, Kenny Rogers was a wise old sage:

You gotta know when to hold 'emKnow when to fold 'emKnow when to walk awayKnow when to runYou never count your moneyWhen you're sittin' at the tableThere'll be time enough for countin'When the dealin's done.

This may seem like strange advice coming from a company that collects on civil judgments. But we talk to too many frustrated potential litigants not to make this point:

Know when to "fold".

Here are some questions to ask before "presenting your hand" in court:

1) Are you just trying to "teach your debtor a lesson"?

Guess what. Your judgment will teach them nothing. A civil judgment is not a moral enforcer. It does not create a change of heart, nor does it "punish" anyone. Your civil judgment is a piece a paper that allows the law to assist you in making financial recourse on your debt. Nothing less, nothing more.

OUR ADVICE - Do not go into court emotional. Focus on your financial game, and not on "teaching your debtor a lesson".

2) Is the debt of a size worth pursuing?

You were defrauded out of $400. This, to you, is no small amount. But, consider the cost of pursuing your case. You have the initial filling fee. You have the cost of time off of work to present your case. If you win your judgment, you then have fees for filing of abstracts, writs of executions, and other legal manuevers. If you need to investigate your debtor, that is no cheap proposition. By the time you calculate the cost of pursuing your judgment, you likely will have spent MORE on pursuing the judgment than verdict granted you.

Am you suing a tenant that is an unemployed deadbeat? Do you know good and well that the person owns nothing but the clothes on their back? Do I understand if the business I am pursuing is operational? If it is, is it a franchise or corporate owned? If you know nothing about your debtor, your chances for recovery are less certain.

OUR ADVICE - if the debt is small and you either know your debtor is a deadbeat or know nothing at all about them, consider FOLDING.

4) Am I patient enough to WAIT on the recovery?

If you go to court for a small amount on a deadbeat, this is what you will have to do. Period. Some cases are not immediately recoverable, especially in debtor-friendly states. Can you wait years to recover on the judgment at a time when your debtor is back on their feet? Are you willing to risk that they may never be in the financial position to do so?

OUR ADVICE - don't fold if you are willing to wait years for recovery on a true deadbeat.

So far, we've been talking about when to "fold 'em", that is, evaluate what cases are worth pursuing, and the mindset you need to have to pursue them. What about the "hold 'em" part?

If you have a high dollar case against a quality debtor, it goes without saying you should "hold 'em". We aren't really talking about that...

We are talking about holding on to your money in the first place.

There are genuine cases of cheating and fraud that leads to a civil judgment. Then, there are situations where prudence, instinct and common sense were ignored when making a financial transaction. This is where we all must really hold 'em in order to not find ourselves in the situation in the first place.

What you can do to "hold 'em":

1) Know your business or contractor.

Don't make any assumptions. Check with BBB and ask for references before committing money to someone you've never worked with before.

2) Read any contracts.

Understand what you're getting into before you sign anything.

3) Screen your renters.

Check with your local or state oversight board about provisions for "permissible purpose" in running credit reports on any potential renters. See our previous post on this subject.

4) Know who you're lending money to.

Just because your loanee is a friend or relative doesn't mean they will feel any more obligated to repay the loan, especially if you know your friend or relative is a deadbeat. Your money is not magic, and will not change a deadbeat into a standup citizen. If anything, you are making the situation worse by enabling the character to continue in their deadbeat ways, without having to suffer the consequences the rest of us face when we are careless with our finances.

Hopefully, a little common sense prevention will help all of us stay at the table, and come out the winner when "the dealin's done".